DW Aina Le'a Development, LLC v. State of Hawaii and its Land Use Commission

Filing 284

ORDER GRANTING MOTIONS IN LIMINE NOS. 6, 8, 9, 11, 12, 16; ORDER DENYING MOTIONS IN LIMINE NOS. 2, 10, 13, AND 14; ORDER GRANTING IN PART AND DENYING IN PART MOTIONS IN LIMINE NOS. 3, 4, 5, AND 7; ORDER POSTPONING RULING ON MOTION IN LIMINE NO. 15 UN TIL A FURTHER MEET AND CONFER OCCURS WITH RESPECT TO IT re: 199 , 203 , 207 , 208 , 209 , 211 , 213 , 214 , 216 , 217 , 222 , 223 , 224 , 225 , 229 The court grants Motion in Limine Nos. 6, 8, 9, 11, 12, and 16. Motion in Limine Nos. 2, 10, 13, and 14 are denied. Motion in Limine Nos. 3, 4, 5, and 7 are granted in part. The court defers its ruling on Motion in Limine No. 15. Signed by JUDGE SUSAN OKI MOLLWAY on 2/6/2024. (cib)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
DW AINA LE`A DEVELOPMENT,
LLC,

)
)
)
Plaintiff,
)
)
vs.
)
)
STATE OF HAWAII, LAND USE
)
COMMISSION; STATE OF HAWAII; )
and DOE GOVERNMENTAL UNITS
)
1-10,
)
)
Defendants.
)
)
_____________________________ )

Civil NO. 17-00113 SOM-WRP
ORDER GRANTING MOTIONS IN
LIMINE NOS. 6, 8, 9, 11, 12,
16; ORDER DENYING MOTIONS IN
LIMINE NOS. 2, 10, 13, AND
14; ORDER GRANTING IN PART
AND DENYING IN PART MOTIONS
IN LIMINE NOS. 3, 4, 5, AND
7; ORDER POSTPONING RULING ON
MOTION IN LIMINE NO. 15 UNTIL
A FURTHER MEET AND CONFER
OCCURS WITH RESPECT TO IT

ORDER GRANTING MOTIONS IN LIMINE NOS. 6, 8, 9, 11, 12, 16; ORDER
DENYING MOTIONS IN LIMINE NOS. 2, 10, 13, AND 14; ORDER
GRANTING IN PART AND DENYING IN PART MOTIONS IN LIMINE NOS. 3, 4,
5, AND 7; ORDER POSTPONING RULING ON MOTION IN LIMINE NO. 15
UNTIL A FURTHER MEET AND CONFER OCCURS WITH RESPECT TO IT
I.

BACKGROUND RELEVANT TO THE MOTIONS IN LIMINE.
The only claim remaining in this case is a temporary

regulatory takings claim asserted by Plaintiff DW Aina Le`a
Development, LLC, against Defendants State of Hawaii Land Use
Commission (“LUC”) and the State of Hawaii (collectively,
“Hawaii”).

Before turning to the fifteen motions in limine that

are the subject of this order, this court details that remaining
claim and the proper measure of damages for it.
The Ninth Circuit has already addressed a similar
temporary regulatory takings claim brought by another party
arising from the very same facts.

In Bridge Aina Le`a, LLC v.

State of Hawaii Land Use Commission, 950 F.3d 610, 632 (9th Cir.

2020), the Ninth Circuit ruled that the relevant takings period
began with the LUC’s written order of April 25, 2011, which
reverted the property from urban to agricultural use, not the
LUC’s oral vote two years earlier, on April 30, 2009.

Id. (“The

reversion lasted roughly a year, from the Reversion Order’s
issuance in April 2011 until the Hawaii state circuit court’s
judgment vacating the order in June 2012.”).

At the hearing on

the motions in limine, DW agreed that the relevant takings period
in this case began with the LUC’s written order of April 25,
2009.

DW argued, however, that the takings period should end on

the date the Hawaii Supreme Court affirmed the trial court.

For

purposes of adjudicating these motions in limine, whether the
takings period ended with the state circuit court’s ruling or the
Hawaii Supreme Court decision does not matter.
In an earlier summary judgment motion filed in this
very case, Hawaii argued that no constitutionally protected
property interest was taken from DW.

In response, DW identified

three separate property interests that it claimed had been taken:
1) a contractual right to develop the residential property under
a joint development agreement; 2) a leasehold interest in the
Ouli Wells; and 3) a right to possess the residential property.
See DW Aina Le`a Development, LLC, V. State of Hawaii, Land Use
Commission, et al., 2022 WL 1665311, at *8 (D. Haw. May 5, 2022).

2

This court ruled that two of those three asserted
interests were not sustainable.

To the extent DW’s takings claim

was based on a contractual right to develop the residential
property under a joint development agreement, the court ruled
that the Takings Clause did not protect those rights.
*8-*10.

See id. at

This court also ruled that the LUC’s reversion order had

not affected any rights relating to the Ouli Wells, so no takings
claim relating to the wells could proceed.

See id., at *13-*14.

With respect to a temporary regulatory taking of the right to
possess property before the sale of the property to DW had
closed, this court ruled that the real right in issue was the
right to possess the residential property before the First
Agreement had closed, and that “the only property interest that
is affected is the right to use the land to produce a profit
before the closing.”

Id. at *12.

DW took an appeal that did not challenge this court’s
rulings rejecting two of DW’s asserted property interests.

Those

two rejected rights are therefore not now part of this case.

See

Ortega v. O’Connor, 50 F.3d 778, 780 (9th Cir. 1995) (holding
that an issue decided by a district court but not raised as error
on appeal may not be challenged on remand); see also JGR, Inc. v.
Thomasville Furniture Indus., Inc., 550 F.3d 529, 532 (6th Cir.
2008) (“A party that fails to appeal an issue waives his right to
raise the issue before the district court on remand or before
3

this court on appeal after remand.

The law-of-the case doctrine

bars challenges to a decision made at a previous stage of
litigation which could have been challenged in a prior appeal,
but were not.”

(alterations, quotation marks, and citation

omitted)); United States v. Escobar-Urrego, 110 F.3d 1556, 1560
(11th Cir. 1997) (“‘Under the law of the case doctrine, a legal
decision made at one stage of the litigation, unchallenged in a
subsequent appeal when the opportunity existed, becomes the law
of the case for future stages of the same litigation, and the
parties are deemed to have waived the right to challenge that
decision at a later time.’” (quoting Williamsburg Wax Museum v.
Historic Figures, 810 F.2d 243, 250 (D.C. Cir. 1987)).
In Bridge, the Ninth Circuit set forth the measure of
just compensation damages for temporary regulatory takings:
In a temporary regulatory taking case, just
compensation damages are modified because
“the landowner’s loss takes the form of an
injury to the property’s potential for
producing income or an expected profit,” not
the loss of the property itself. Wheeler v.
City of Pleasant Grove, 833 F.2d 267, 271
(11th Cir. 1987). In these circumstances,
“[t]he landowner’s compensable interest . . .
is the return on the portion of fair market
value that is lost as a result of the
regulatory restriction. Accordingly, the
landowner should be awarded the market rate
return computed over the period of the
temporary taking on the difference between
the property’s fair market value without the
regulatory restriction and its fair market
value with the restriction.” Id. (citing
Nemmers v. City of Dubuque, 764 F.2d 502, 505
(8th Cir. 1985)).
4

950 F.3d at 632 n.12.
of damages.

DW agrees that this is the proper measure

See, e.g., ECF No. 220, PageID #s 5377-79.

In

opposing one of the motions in limine (Motion in Limine No. 9,
seeking to preclude evidence pertaining to DW’s name and business
reputation), DW explained that this calculation of damages allows
“the landowner [to] recover[] what he lost.

To award any

affected party additional compensation for lost profits or
increased costs of development would be to award double recovery:
the relevant fair market values by definition reflect a market
estimation of future profits and development costs . . . .”

ECF

No. 258, PageID # 9047.
Just compensation for temporary regulatory takings do
not include consequential damages such as lost profits, moving
expenses, and loss of goodwill.

See also United States v. Gen.

Motors Corp., 323 U.S. 373, 379 (1945) (noting in an eminent
domain case that just compensation does not include lost profits,
expense of moving, loss of goodwill, and other consequential
losses); Ideker Farms, Inc. v. United States, 71 F.4th 964, 987
(Fed. Cir. 2023) (ruling that consequential damages, such as lost
profits, loss of goodwill, and the cost of moving to a new
facility, are not awardable under the Fifth Amendment); United
States v. 10.56 Acres, More or Less, situated in Whatcom Cnty.,
Wash., 2008 WL 3977614, at *5 (W.D. Wash. Aug. 22, 2008) (ruling
that consequential damages, including opportunity costs, lost
5

profits, loss of goodwill, and relocation expenses, are not
compensable under the Fifth Amendment).

Similarly, just

compensation damages do not include damages arising out of
governmental interference with contractual rights, as those
damages are also consequential damages not awardable with respect
to takings claims.

See DW, 2022 WL 1665311, at *9.

Keeping in mind the contours of DW’s remaining takings
claim and DW’s asserted just compensation damages, the court
turns to Hawaii’s motions in limine.

This court has previously

issued an order addressing Hawaii’s Motion in Limine No. 1.
Motion in Limine Nos. 2 through 16 are now before the court.
II.

MOTION IN LIMINE NO. 2.
On December 20, 2023, Hawaii filed Motion in Limine

No. 2, seeking to exclude lay testimony by Robert Wessels with
respect to (1) the lack of economic feasibility of agricultural
uses of the property, and (2) the value of DW’s possessory
interest in the property.

Hawaii argues that Wessels lacks

personal knowledge to support his testimony that the property was
worthless in an agricultural zone because it was a lava field
suitable only for housing development.

Hawaii argues that any

such statements by Wessels lack material value and should be
excluded as irrelevant, likely to cause unfair prejudice,
misleading to the jury, and unhelpful.

6

See ECF No. 199.

On January 9, 2023, DW filed its opposition to the
motion.

DW argues that Wessels has personal knowledge and

experience that allow him to testify that there were no other
uses for the property and that the value of the land in
agricultural zoning was worthless.

See ECF No. 212.

In opposing

motions for summary judgment that are now pending before the
court, Wessels, a principal in DW, submitted a declaration
indicating that, once the LUC reverted the land from urban to
agricultural use, “the project was worthless.”
1,PageID # 4767.

See ECF No. 190-

Wessels does not detail precisely how the

reversion order affected the value of the property before
reversion, saying only that all value was eliminated by the
reversion.

He does not, for example, provide any dollar value

for the property before reversion, saying only that all value was
eliminated by the reversion because the reversion left “no use
for the land except public Lava views for which you can’t get any
income.”

ECF No. 190-1, PageID # 4768.

In deposition testimony,

he admitted that DW did not actually explore other uses for the
land.

See ECF No. 199-3, PageID # 4985.

In short, “neither [he]

nor DW actually did a valuation of what else might be able to be
done with the property and agricultural use.”

See ECF No. 254-2,

PageID # 9019.
On January 17, 2024, Hawaii filed a reply in support of
its Motion in Limine No. 2.

See ECF No. 254.

7

The court denies Motion in Limine No. 2.

Wessels’s

reliance on his personal knowledge and experience does not render
his lay opinion inadmissible.

The failure by Wessels and DW to

consider nonresidential uses for the property goes to
credibility, not admissibility.

Nor does Wessel’s failure to

consider other possible uses for the property render irrelevant
his personal lay opinion as a DW principal that the land became
worthless.

The grounds raised in Motion in Limine No. 2 do not

suffice to preclude Wessels’s lay opinion.
III.

MOTION IN LIMINE NO. 3.
On December 28, 2023, Hawaii filed Motion in Limine

No. 3, seeking to preclude DW from presenting evidence of
consequential damages, including contract damages, evidence of
lost profits, interest costs, lost business opportunities,
increased land acquisition costs, inability to obtain financing,
and damages to business name and reputation.

See ECF No. 203.

On January 15, 2023, DW filed its opposition to Motion
in Limine No. 3.

See ECF No. 220.

As noted earlier in this order, consequential damages
are not recoverable for a temporary regulatory taking.
Accordingly, to the extent Motion in Limine No. 3 seeks to
preclude DW from presenting evidence of consequential damages,
including lost profits and other losses incurred as a result of
alleged interference with contract rights, the motion is granted.

8

However, this ruling does not mean that all evidence of
lost profits is necessarily irrelevant.

The Penn Central takings

analysis requires examination of three factors to determine
whether a regulatory taking is the functional equivalent of a
classic taking: “(1) ‘[t]he economic impact of the regulation on
the claimant,’ (2) ‘the extent to which the regulation has
interfered with distinct investment-backed expectations,’ and
(3) ‘the character of the governmental action.’”

Bridge Aina

Le`a, 950 F.3d at 630 (quoting Penn Central Transportation
Company v. City of New York, 438 U.S. 104, 124 (1978)).

DW may

introduce evidence of distinct investment-backed expectations for
the relevant takings period, such as realistic lost profits, in
the course of seeking to prove that a Penn Central taking
occurred.

This evidence is distinguishable from evidence offered

to prove lost profits as damages.

Thus, in Bridge, with respect

to the distinct investment-backed expectation prong of the Penn
Central test, the Ninth Circuit examined whether Bridge had a
reasonable hoped-for return on its investment and whether the
reversion had meaningfully interfered with the hoped-for return
during the takings period.

950 F.3d at 634.

To clarify, this court rules that DW may not introduce
evidence that its damages include profits lost outside the
takings period.

Such profits are not recoverable.

Thus, DW may

not seek damages in the form of profits allegedly lost because of
9

the LUC’s 2009 oral vote.

At most, DW may present evidence of

distinct investment-backed expectations relating to an alleged
Penn Central taking to the extent those expectations relate to
the 2011 written reversion order that caused the taking.

This

court recognizes Hawaii’s concern that allowing evidence of
investment-backed expectations invites confusion with evidence of
damages and that the court’s restriction on damage evidence could
be eviscerated thereby.

The court thinks this danger can be

addressed with limiting instructions that Hawaii should feel free
to draft.
IV.

MOTION IN LIMINE NO. 4.
On January 8, 2024, Hawaii filed Motion in Limine

No. 4, seeking to preclude evidence of the value of DW’s
development rights.

See ECF No. 207.

DW did not oppose this

motion.
On May 5, 2022, this court ruled that, to the extent
DW’s takings claim was based on a contractual right to develop
the residential property under a joint development agreement, the
Takings Clause did not protect that right.

Accordingly, the

court granted summary judgment in favor of Hawaii with respect to
DW’s takings claim to the extent it was based on a contractual
right to develop the property.

See 2022 WL 1665311, at *8-*10.

That ruling was not appealed and is law of the case.

10

The court grants Motion in Limine No. 4 in part.

The

court precludes DW from seeking to prove just compensation
damages based on its claim that the development rights became
worthless.

Any such evidence does not go to the proper measure

of just compensation damages.

However, to the extent Motion in

Limine No. 4 seeks to exclude development rights damages for
other purposes, the motion is denied if DW can show that those
rights are relevant to its distinct investment-backed
expectations for purposes of demonstrating a Penn Central taking.
That evidence is not precluded by this order.
V.

MOTION IN LIMINE NO. 5.
On January 8, 2024, Hawaii filed Motion in Limine

No. 5, seeking to preclude DW from presenting evidence regarding
the alleged effects of LUC actions or proceedings before April
25, 2011, when the LUC issued its written reversion order.

See

ECF No. 208.
On January 22, 2024, DW filed its opposition to Motion
in Limine No. 5.

See ECF No. 255.

DW argues that matters that

happened as a result of the LUC’s voice vote in 2009 affected
DW’s distinct investment-backed expectations (one of the prongs
of the Penn Central takings test).
The court, which is not writing on a blank slate,
grants the motion in part.

11

As noted above, the Ninth Circuit ruled in Bridge that
the relevant takings period with respect to the very regulatory
taking alleged by DW began on April 25, 2011, when the LUC issued
its written order reverting the property from urban to
agricultural use, and ended when the state trial court reversed
the LUC’s order on June 15, 2012.

At the hearing on Motion in

Limine No. 5, DW agreed that the relevant takings period began on
April 25, 2011, stating that it was not suggesting that any
reversion happened before the LUC’s 2011 written reversion order.
In Bridge, 950 F.3d at 632, the Ninth Circuit
recognized that two years before the LUC’s 2011 written reversion
order, the LUC had orally reverted the land, and that DW had then
lost funding and defaulted on its contractual obligation to
purchase the land.

The Ninth Circuit nevertheless did not treat

the voice vote as starting the takings period, focusing instead
on the 2011 written reversion order and ruling that it had begun
any taking.

Id. at 633 (citing Tahoe-Sierra Pres. Council, Inc.

v. Tahoe Reg'l Plan. Agency, 216 F.3d 764, 783 n.33 (9th Cir.
2000), rev’d on other grounds, Gonzalez v. Ariz., 677 F.3d 383,
389 n.4 (9th Cir. 2012) (en banc)).
The Bridge decision appears to have treated the LUC’s
voice vote as nonfinal.

Indeed, DW moved to stay entry of any

order with respect to the oral decision of April 30, 2009,
pending consideration of additional evidence.
12

On June 5, 2009,

the LUC granted that request and stayed the entry of its
reversion order pending a further hearing.

After receiving

additional evidence at that further hearing, the LUC, by a 6-3
vote, rescinded its April 2009 voice vote and vacated the
accompanying order to show cause, on condition that sixteen
affordable units be completed by March 31, 2010.

See DW Aina

Le`a, 134 Haw. at 197-99, 339 P.3d at 695-97.
Nothing in the record suggests that state officials
would have enforced the agricultural reversion on the basis of
the voice vote.

On this point, there may or may not be

additional evidence to be had, but if there is such evidence, it
is not in the record, neither in connection with pending summary
judgment matters to which this evidence would be highly relevant,
nor in connection with Motion in Limine No. 5.

This court is

thus in the same position as the Ninth Circuit was in Bridge and
has no ground to diverge from the takings period defined in
Bridge.
With respect to distinct investment-backed
expectations, the Ninth Circuit noted in Bridge that the
landowner had hoped to make a 20 percent annual return.

Bridge

ruled that, even if that hoped-for return was reasonable, the
2011 written reversion order “could not have meaningfully
interfered with it” during the takings period because the
landowner did not expect any profit unless and until the LUC
13

amended the 1991 affordable housing condition.

At the time of

the 2011 written reversion order, there were only sixteen
uninhabitable units built.

Bridge noted that the landowner

therefore could not have had a reasonable expectation of making a
20 percent return during the takings period.

Id.

Given the focus in the Bridge decision on whether the
2011 written reversion order affected the landowner’s distinct
investment-backed expectations for the takings period, this court
views the relevant period for DW to be focusing on, both in terms
of distinct investment-backed expectations and in terms of
damages, as the actual takings period from 2011 to 2012.

Thus,

to the extent the motion seeks to preclude DW from using evidence
outside of the takings period to establish a taking or any damage
amount, the motion is granted.

However, the court is not

precluding DW from mentioning what occurred, including what
occurred to DW, in the course of telling the story of this
dispute.

Limiting instructions should suffice to avoid abuse.

VI.

MOTION IN LIMINE NO. 6.
On January 8, 2024, Hawaii filed Motion in Limine

No. 6, seeking to preclude DW from introducing evidence of land
value based on the “subdivision approach” (also known as the “lot
method” and the “developer’s residual approach”).
209.

See ECF No.

Hawaii argues that the “subdivision approach” is so

14

speculative that it is unfairly prejudicial and is likely to
confuse issues and mislead the jury.

Id.

On January 22, 2024, DW filed its opposition to
Motion in Limine No. 6.

See ECF No. 266.

DW’s opposition argues

in a conclusory fashion that it should be permitted to offer
testimony of the “subdivision approach” because the sale of homes
was imminent and not purely speculative.
In an eminent domain proceeding, the Ninth Circuit
examined just compensation for property.

It began by noting that

there are generally three recognized appraisal methods for
ascertaining a property’s fair market value: (1) comparable
sales; (2) income or capitalization of income; and
(3) reproduction cost at the time of the taking, less
depreciation.

United States v. 99.66 Acres of Land, 970 F.2d

651, 655 (9th Cir. 1992).

The Ninth Circuit noted:

Courts occasionally allow valuation testimony
on a fourth method, called either the lot
method or the developer’s residual approach.
An appraiser using the lot method estimates a
sale price for each individual, developed
lot, multiplies that price by the number of
lots in the tract, then deducts estimated
costs of development and marketing. The
sales price total is also adjusted downward,
or discounted, to account for the sale
occurring in a single transaction now rather
than numerous transactions over time. To
determine fair market value for the purposes
of just compensation, the comparable sales
method is preferred, but the lot method may
be used where no comparable sales exist and
facts show that a market for individual lot
sales is not speculative.
15

Id.
It is not at all clear that DW has the necessary facts
to support a “subdivision approach” for determining the fair
market value of the property.

First, in DW’s case in chief,

Wessels may only testify as a lay witness.

The record does not

show that he has the personal experience to testify as an
“appraiser.”
Even if the court examines Wessel’s rebuttal expert
disclosure, ECF No. 162-2, PageID #s 4323-27, he does not appear
to be trying to establish the fair market value of the property
using the “subdivision approach.”

Instead, he states that DW

lost development rights worth $72,582,760 with respect to a
37.86-acre property and $598,566,808 with respect to a 1,034-acre
property.

See id., PageID # 4326; ECF No. 209-3 (“Q: And just so

we’re clear, are those numbers, the 72 million and the 598
million numbers, are those damages that DW seeks in this case?
A: Yes, I believe they are for the developer rights.”).

As

already noted, under this court’s prior ruling, DW cannot
maintain a takings claim based on lost development rights.

See

2022 WL 1665311, at *9.
DW appears to want to argue through Wessels or
otherwise that the value of the lost development rights is
related to the value of the property before the takings period
began and that the value of the property afterward was zero.

16

This court has discussed this DW approach in connection with
other motions in limine.

Regardless of how DW ultimately

presents its claims, any attempt to use the “subdivision
approach” is barred as too speculative to be admissible.
For example, in connection with a summary judgment
motion currently before this court, Wessels says that DW lost
$22,270,364 in profits during the takings period.
190-1, PageID # 4767.

See ECF No.

Wessels explains that, because DW’s

funding stopped, it could not complete the utilities necessary to
obtain the certificates of occupancy for the first sixteen
affordable units.

Because it could not sell those units, it lost

cash flow from the sales of those units that could have been used
to fund construction of additional units, ultimately leading to
the $22,270,364 in allegedly lost profits.

See id.

DW conceded at the summary judgment motion hearing in
December 2023, however, that funding was lost as a result of the
LUC’s 2009 voice vote, not because of the LUC’s 2011 written
reversion order.

See ECF No. 194, PageID #s 4936-37 (admitting

that the flow of funding to DW stopped upon the LUC’s voice vote,
rather than upon its written order reverting the property).

If

DW lacked funding before the written reversion order to complete
the initial affordable units, DW cannot point to that order as
having prevented the sale of those units and having robbed DW of
the capital necessary to develop the next phase, and so on.

17

The court additionally notes that DW may be conflating
its rights relating to the affordable housing parcel with Aina
Le`a’s rights, as DW had assigned those rights to Aina Le`a in
December 2009.

See ECF No. 142-9, PageID # 3440.

At the same

time, Bridge conveyed the affordable housing parcel to Aina Le`a.
See ECF No. 142-10.

Thus, it is not at all clear that a lack of

funding prevented DW itself from completing the first sixteen
units in the affordable housing parcel.
In any event, Wessels’s projection that DW lost
development rights worth $72,582,760 with respect to a 37.86-acre
property and $598,566,808 with respect to a 1,034-acre property
is entirely speculative.
Nor does the record reflect that the sale of the homes
was imminent, as stated in the opposition to this motion.
ECF No. 266, PageID # 9488.

See

While DW says it could have begun

selling the first units six months after the 2011 reversion,
Wessels admitted that “there was a substantial amount of
infrastructure work that remained” at that time.
209-3, PageID #s 5150-51.

See ECF No.

The record simply does not establish

that, but for the 2011 reversion, DW would have had the funding
to complete and sell the sixteen affordable housing units on the
affordable housing parcel owned by Aina Le`a.

Accordingly, the

court determines that reliance on any such sales to determine the

18

value of the property allegedly taken is too speculative to allow
the use of the “subdivision approach.”
Motion in Limine No. 6 is granted, and DW is precluded
from introducing evidence of land value based on the “subdivision
approach.”
VII.

MOTION IN LIMINE NO. 7.
On January 9, 2024, Hawaii filed Motion in Limine

No. 7, seeking to preclude DW from presenting testimony regarding
the purported $17 million note memorializing a debt owed by Aina
Le`a to DW.
exists.

See ECF No. 211.

DW has admitted that no such note

Hawaii therefore argues that DW should be precluded from

discussing any specific note terms, including a term allegedly
entitling DW to Aina Le`a’s first $17 million in profits.
On January 22, 2024, DW filed its opposition to the
motion.

See ECF No. 256.

While DW concedes that there is no

note, DW argues that Wessels should still be allowed to testify
about the debt that the note supposedly represents.
The precise terms of the $17 million debt are
irrelevant to DW’s takings claim.

In reversing this court’s

ruling that DW lacked standing to pursue its takings claim, the
Ninth Circuit held that this court had “erred by concluding that
DW lacked Article III standing.

DW holds an unsecured note that

obligates Aina Le`a to pay DW $17 million after the sale of the
residential portion of the property.”

19

DW therefore has standing

to assert its remaining takings claim based on its alleged right
to possess the residential property and the harm it alleges it
suffered.

But the note in not otherwise relevant.
DW conceded at the recent hearing on remand that there

was never a physical note through which Aina Le`a was obligated
to pay DW $17 million.

See Transcript of Proceedings (Dec. 5,

2023), ECF No. 194, PageID # 4924 (“I do not believe that there’s
a physical note”).

Instead, the claimed $17 million obligation

was based on a January 2012 agreement through which DW assigned
its rights to the residential property and the parties agreed
that, if Aina Le`a acquired the residential property, “AINA LE`A
shall pay DW for this assignment[] the sum of $17,000,000, to be
paid by AINA LE`A issuing its unsecured note, which note shall
then be paid from the proceeds of future parcel resales.”

The

agreement did not say that DW would receive the first $17 million
of those resale parcels.

See ECF No. 142-15, PageID # 3637.

DW first asserted a right to the first $17 million of
Aina Le`a’s profits long after the Complaint in this matter had
been filed.

By the time of the assertion, the statute of

limitations had run on any claim Aina Le`a might have wanted to
make, the Bankruptcy Court had determined that Aina Le`a owned
the takings claims at issue, and Hawaii had sought summary
judgment on the ground that DW lacked standing to pursue a
takings claim.

In making its assertion, DW relied on a document

20

backdated to December 30, 2015, but actually drafted in March
2022 to oppose Hawaii’s summary judgment motion challenging DW’s
standing.

Besides Wessels’s unsupported statements of

entitlement to the first $17 million, see, e.g., ECF No. 76-4,
PageID # 1891, ECF No. 78-6, PageID # 2384, the record contains
no admissible evidence establishing DW’s claims of entitlement to
the first $17 million.

The most the record contains is a

document stating, “Within 90 days following the end of each
fiscal year[,] Aina Le`a Inc. will pay 10% of the net profit from
[the residential properties] to DW Aina Le`a Development, LLC,
until such time as $17 million has been paid to DW Aina Le`a
Development, LLC.”

ECF No. 142-17, PageID #s 3672-73.

DW conceded at the hearing held in December 2023 that
the only basis of its claim to the first $17 million is the
January 2012 agreement discussed in the previous paragraph.

That

document does not speak to the priority of DW’s alleged
entitlement.

See ECF No. 194, PageID # 4925.

Whether DW is entitled to the first $17 million of Aina
Le`a’s profits or is simply owed $17 million by Aina Le`a does
not matter for purposes of the present ruling.1

1

The court grants

At the hearing in December 2023, the court asked DW to
identify language in the Complaint indicating that DW was
asserting a claim for damages based on Aina Le`a’s interest in
the property. DW could not identify any such language in the
Complaint. See ECF No. 194, PageID #s 4932-34. On November 30,
2023, the court denied DW’s request to either amend its Complaint
to add Aina Le`a, Inc., as a party or to allow DW to assert Aina
21

Motion in Limine No. 7 to the extent the motion seeks to preclude
DW from introducing evidence that a $17 million note exists or
from offering terms of the purported note (such as a provision
regarding the first $17 million of Aina Le`a’s profits).
However, to the extent the motion seeks to prevent DW from
introducing evidence regarding the transfer of its right to the
residential property to Aina Le`a, including the price of that
transfer, the motion is denied.

The actual terms of the supposed

$17 million debt are irrelevant, as those terms do not go towards
DW’s damages for the alleged taking (which do not include
contractual damages) or any other issue remaining in this case,
but evidence of the fact of the $17 million debt is not
precluded.
VIII.

MOTION IN LIMINE NO. 8.
On January 9, 2024, Hawaii filed Motion in Limine

No. 8, seeking to preclude DW from presenting evidence of Aina
Le`a’s damages.

See ECF No. 213.

DW opposes the motion, arguing that it should be
allowed to present evidence of Aina Le`a’s damages because DW is

Le`a, Inc.’s claims. See ECF No. 186. In denying the request,
this court stated: “Just as DW cannot now add a party to assert
untimely claims, DW cannot now amend its Complaint to pursue
claims on its own behalf belonging to Aina Le`a. Such claims
would be untimely. Amendment to add those claims would be futile
because of the six-year statute of limitations.” Id., PageID
# 4702.
22

allegedly entitled to the first $17 million of those damages.
See ECF No. 257.
This motion is similar to Motion in Limine No. 7.

For

the same reasons, the court grants Motion in Limine No. 8 and
precludes DW from presenting evidence of Aina Lea`s damages.
Aina Lea’s damages are irrelevant to DW’s takings claim in this
action.
IX.

MOTION IN LIMINE NO. 9.
On January 9, 2024, Hawaii filed Motion in Limine

No. 9, seeking to preclude DW from presenting evidence of damages
to DW’s business name and/or reputation.

See ECF No. 214.

Hawaii argues that such evidence is irrelevant, as damages to a
business name and/or reputation are not properly awardable for
regulatory takings claims.

Id.

On January 22, 2024, DW filed its opposition to the
motion.

See ECF No. 258.

DW argues that evidence of damages to

its name and reputation are relevant to its distinct investmentbacked expectations, one of the elements of a Penn Central
takings claim.
Motion in Limine No. 9 is granted.

The proper measure

of damages for a temporary regulatory takings claim was set forth
above.

Such damages do not include damages arising out of harm

to a business’s name or reputation, and are instead measured by
the damage to the property.
23

X.

MOTION IN LIMINE NO. 10.
On January 10, 2024, Hawaii filed Motion in Limine

No. 10, seeking to preclude DW from presenting evidence of
reports and opinions of third parties for the truth of the matter
asserted when the third parties have not been designated as
witnesses and there is no applicable exception to the hearsay
rule.

See ECF No. 216.
On January 22, 2024, DW filed its opposition to the

motion.

See ECF No. 259.
The court denies the motion at this time without

prejudice to its being renewed with respect to particular
evidence in the future, when the court can discern the context in
which evidence is offered.
ruling.

The court declines to make a blanket

For example, if DW seeks to introduce evidence that

Hawaii objects to on hearsay grounds, the court will give DW a
chance to argue that a particular hearsay exception applies
(e.g., that the evidence is a business record for purposes of
Fed. R. Evid. 803(6)).

Or, if Wessels is qualified as a rebuttal

expert, under Rule 703, he may base an opinion on facts or data
that experts in the field would reasonably rely on.
XI.

MOTION IN LIMINE NO. 11.
On January 10, 2024, Hawaii filed Motion in Limine

No. 11, seeking to preclude Paul Brewbaker from offering legal
conclusions, including opinions as to whether a taking occurred.

24

See ECF No. 217; United States v. Scholl, 166 F.3d 964, 973 (9th
Cir. 1999) (noting that experts should not testify about the law,
but instead interpret and analyze factual evidence).
On January 22, 2024, DW opposed the motion, agreeing
that Brewbaker may not testify about the law and noting that DW
does not intend for Brewbaker to do so, and arguing that the
motion should therefore be denied as unnecessary.

See ECF No.

260.
The court grants the motion as unopposed, seeing no
prejudice to DW.
about the law.

Brewbaker is precluded from giving opinions
To the extent he is qualified as a rebuttal

expert, he may give opinions within the scope of what he is
qualified to testify on (e.g., damages) to rebut Hawaii’s
evidence.
Hawaii expressed concern that Brewbaker would try to
characterize legal opinions as testimony about damages.

That is

a subject for objections during trial.
XII.

MOTION IN LIMINE NO. 12.
On January 15, 2024, Hawaii filed Motion in Limine

No. 12, seeking to preclude DW from presenting evidence of
alleged takings or damages based on any interest other than DW’s
possessory interest in the residential property.
222.

25

See ECF No.

On January 22, 2024, DW opposed the motion, agreeing
that its takings claim arises out of its possessory interest in
the residential property, but arguing that it should also be able
to pursue the first $17 million of Aina Le`a’s claims.

See ECF

No. 261.
The motion is granted.

While Aina Le`a may have some

claim to profits that include the first $17 million that DW says
Aina Le`a owes DW, DW’s taking damages are to be calculated as
the rate of return discussed earlier in this order.

DW’s damages

do not include Aina Le`a’s damages, and DW’s assertion that it is
entitled to money from Aina Le`a does not mean that it may assert
Aina Le`a’s claims.
XIII.

MOTION IN LIMINE NO. 13.
On January 15, 2024, Hawaii filed Motion in Limine

No. 13, seeking to preclude DW from presenting evidence and
argument as to the propriety of the LUC’s 2011 written order
reverting the land use classification of the residential property
from urban to agricultural.

See ECF No. 223.

On January 22, 2024, DW opposed the motion, arguing
that it needs to present evidence at trial establishing that the
reversion order was improper to establish a taking.

See ECF No.

262.
Because there does not appear to be a stipulation that
the LUC’s written order was improper, evidence of that alleged

26

impropriety (including the state court’s reversal of it) is
relevant to DW’s takings claim.

Motion in Limine No. 13 is

denied.
XIV.

MOTION IN LIMINE NO. 14.
On January 15, 2024, Hawaii filed Motion in Limine

No. 14, seeking to preclude rebuttal expert testimony by Paul
Brewbaker and Robert Wessels, who were identified as rebuttal
experts in ECF Nos. 159 and 162.

See ECF No. 224.

On January 22, 2024, DW filed its opposition to the
motion.

See ECF No. 263.
In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509

U.S. 579, 589 (1993), the Supreme Court examined a scientific
expert and held that expert testimony is admissible only if it is
both relevant and reliable.

In Kumho Tire Co. v. Carmichael, 526

U.S. 137, 146 (1999), the Court explained that the presiding
judge’s role (or gatekeeping function) in ensuring the
reliability and relevancy of expert testimony extends to all
expert testimony.
Daubert listed nonexclusive factors, such as testing,
peer review and publication, error rates, and acceptance in the
relevant community, some or all of which might help a court to
determine the reliability of a particular theory or technique.
Daubert, 509 U.S. at 593–94.

The Daubert test is “flexible,” and

the “list of specific factors neither necessarily nor exclusively
27

applies to all experts or in every case.

Rather, the law grants

a district court the same broad latitude when it decides how to
determine reliability as it enjoys in respect to its ultimate
reliability determination.”

Kumho, 526 U.S. at 141.

Even dubious opinions may pass the Daubert gatekeeping
requirements.

See Dorn v. Burlington N. Santa Fe R.R. Co., 397

F.3d 1183, 1196 (9th Cir. 2005) (“The Supreme Court in Daubert v.
Merrell Dow Pharmaceuticals, Inc., was not overly concerned about
the prospect that some dubious scientific theories may pass the
gatekeeper and reach the jury under the liberal standard of
admissibility set forth in that opinion; indeed, the Court said,
‘Vigorous cross-examination, presentation of contrary evidence,
and careful instruction on the burden of proof are the
traditional and appropriate means of attacking shaky but
admissible evidence.’” (quoting Daubert, 509 U.S. at 596); S.M.
v. J.K., 262 F.3d 914, 921 (2001) (“A court may admit somewhat
questionable testimony if it falls within the range where experts
might reasonably differ, and where the jury must decide among the
conflicting views.” (internal quotation and citation omitted), as
amended by 315 F.3d 1058 (9th Cir. 2003)).
This court need not decide at this time whether, in its
gatekeeping role, it should qualify Brewbaker or Wessels as a
rebuttal expert witness.

Under Daubert, 509 U.S. at 589, this

“judge must ensure that any and all [expert] testimony or
28

evidence admitted is not only relevant, but reliable.”

But that

does not mean that this judge must hold an evidentiary hearing in
advance of trial.

See United States v. Alatorre, 222 F.3d 1098,

1104 (9th Cir. 2000) (recognizing that trial court has discretion
with respect to timing of Daubert hearing and that trial court
need not conduct pretrial hearing); United States v. Leones, 2009
WL 10695612, at *3 (D. Haw. Jan. 26, 2009) (“In interpreting the
Supreme Court’s holding in Daubert, however, the Ninth Circuit
Court of Appeals has repeatedly stated that a trial court is not
required ‘to conduct separate, pretrial hearings to discharge
their gatekeeping duties’ under Daubert.”).
Pending before this court are summary judgment
proceedings that could theoretically negate the need to address
any Rule 702 matter.

Even if this case proceeds to trial,

Brewbaker and Wessels have only been named as rebuttal experts.
Possibly, this matter might be decided by a motion for judgment
as a matter of law at the close of DW’s case in chief.

In either

event, rebuttal expert testimony would be unnecessary.
Accordingly, the court denies Hawaii’s request for a
determination at this time as to whether Brewbaker and Wessels
may testify as rebuttal experts.

Hawaii may renew its request

for a Daubert hearing at a later time before Brewbaker or Wessels
actually presents rebuttal expert testimony.

29

XV.

MOTION IN LIMINE NO. 15.
On January 15, 2024, Hawaii filed Motion in Limine

No. 15, seeking to preclude DW from presenting evidence of, or
from, documents identified and relied on in depositions but not
produced to Hawaii.

See ECF No. 225.

On January 22, 2024, DW filed its opposition to the
motion, arguing that the documents had, in fact, been produced to
Hawaii.

See ECF No. 264.
On February 1, 2024, Hawaii filed a supplement,

describing the documents that remain in issue with respect to
Motion in Limine No. 15.

This supplemental filing indicates that

DW sent documents and an explanation minutes before Hawaii’s
supplemental filing was due.

See ECF No. 280.

As a result, the

parties clearly have not yet discussed the particulars of each
document in issue.
This court declines to examine the circumstances under
which each particular document has or has not been disclosed to
determine which documents are admissible until after the parties
have further met and conferred.

The parties must do so no later

than March 1, 2024, with respect to any document Hawaii still
seeks to preclude in Motion in Limine No. 15.

At least one week

before any further meet and confer, Hawaii must provide DW with a
list of documents that remain in issue.

Then, at least two

business days before the meet and confer, DW shall respond in

30

writing with a description of exactly when any document in issue
was previously produced.
The court postpones ruling on Motion in Limine No. 15,
as it appears from the record that the parties have not
sufficiently discussed the details of that motion such that they
have been able to try to narrow the documents in issue.
XVI.

MOTION IN LIMINE NO. 16.
On January 22, 2024, Hawaii filed Motion in Limine

No. 16, seeking to preclude DW from presenting evidence of
damages for delays in the development of the property, arguing
that the delays were not caused be the written reversion order,
but instead by DW’s noncompliance with environmental laws.

See

ECF No. 229.
On January 22, 2024, DW filed its opposition to the
motion, arguing that it did comply with environmental laws.

See

ECF No. 265.
Whether environmental laws caused or did not cause
damages need not be decided at this time.

As noted earlier,

consequential damages (i.e., damages for delays to the
development of the property) are not compensable for DW’s
remaining takings claim.

Evidence of consequential damages for

delays in the development of the property have already been
precluded as irrelevant, regardless of whether the delays were or

31

were not caused by environmental laws.

Accordingly, the court

grants Motion in Limine No. 16 on relevance grounds.
XVII.

CONCLUSION.
The court grants Motion in Limine Nos. 6, 8, 9, 11, 12,

and 16.

Motion in Limine Nos. 2, 10, 13, and 14 are denied.

Motion in Limine Nos. 3, 4, 5, and 7 are granted in part.

The

court defers its ruling on Motion in Limine No. 15.
It is so ordered.
DATED: Honolulu, Hawaii, February 6, 2024.

/s/ Susan Oki Mollway
Susan Oki Mollway
United States District Judge

DW Aina Le`a Development, LLC, v. State of Hawaii, Land Use Commission, et al., Civ.
No. 17-00113 SOM/WRP; ORDER GRANTING MOTIONS IN LIMINE NOS. 6, 8, 9, 11, 12, 16; ORDER
DENYING MOTIONS IN LIMINE NOS. 2, 10, 13, AND 14; ORDER GRANTING IN PART AND DENYING
IN PART MOTIONS IN LIMINE NOS. 3, 4, 5, AND 7; ORDER POSTPONING RULING ON MOTION IN
LIMINE NO. 15 UNTIL A FURTHER MEET AND CONFER OCCURS WITH RESPECT TO IT

32